Worcester to work with UMass on Biotech Park tenants

The city will work with the University of Massachusetts Medical School to try to fill vacancies at Biotech Park, city and school officials announced Tuesday night.

City Manager Michael V. O’Brien said the aim was to have the city “held harmless” and to help keep the park filled with taxpaying tenants.

But city councilors were not as diplomatic, calling communication between the institution and the city poor, and exploring the possibility of challenging its nonprofit status in some instances.

In a letter Tuesday to Mr. O’Brien, UMass Chancellor Michael Collins wrote that vacancy rates at the park off Plantation Street, which UMass recently purchased for $40 million from Alexandria Real Estate, are a serious issue.

“To overcome this will require an intensive and collaborative effort by us and the city, and I was pleased to receive your pledge of commitment to this effort,” Mr. Collins wrote.

Mr. O’Brien said the city will commit to work with UMass to find incentives to put on the properties to lure businesses. He said he has asked the chancellor for 30 days to come to an agreement on how to fill the vacancies. Mr. O’Brien told the council that part of the vacancy issue is in part because of UMass returning its own Biotech Park operations to campus.

In a longer statement released  by the medical school Tuesday, the purchase of the park was framed as a strategic move to prevent the medical school from becoming a neighbor to “an underutilized campus owned by an absentee landlord with little interest in attracting new tenants or maintaining investment in the properties.”

The school noted that it was bound by confidentiality agreements from talking about the sale, and said the formation of a subsidiary, the Worcester City Campus Corporation, was completely noncontroversial and overseen by the University of Massachusetts Board of Trustees.

The school noted that the purchase of Biotech 3, 4 and 5 was made using existing reserves — not appropriated funds — and those reserves will be replenished by the proceeds of bond financing.

City officials say the purchase of Biotech Park by the nonprofit could result in the loss of $1.5 million in tax revenues.

In his letter, Mr. Collins wrote that the school shared the city’s concern about the loss of tax revenues, and said the school will commit to “using our best efforts to attract high-quality, long-term, for-profit tenants to these properties.”

City councilors were quick to praise UMass as a major presence in the city landscape and its huge role in the local economy. But they expressed frustration at the secrecy surrounding the deal and the impact it could have on the city tax base. District 1 Councilor Tony Economou and District 3 Councilor George Russell called for a renewed push for a formal payment-in-lieu-of-taxes program.

“There is nothing more that cries PILOT to me than this,” Mr. Economou said.

Mr. Economou said he wants to work with the state legislative delegation to start talks on formalizing a PILOT program.

The delegation did take note of the fallout from the UMass purchase, and councilors received a copy of a letter Tuesday from state Sen. Michael O. Moore to UMass President Robert L. Caret announcing that the state Senate’s Committee on Higher Education will hold an oversight hearing regarding the acquisition.

“In light of the budgetary impact that could potentially face the city of Worcester as a result of this transaction,” the letters states, the committee, along with members of the Senate Post Audit Committee, is requesting Mr. Caret’s presence for a hearing. The letter said the committee wants to discuss the $40 million acquisition, communication with the city regarding the acquisition, the intended future use of the property and the loss of tax revenue to the city of Worcester.

At-large Councilor Kathleen M. Toomey called the secrecy surrounding the purchase an insult to the community, and wondered what programs and city budget proposals the estimated tax revenue loss would have. District 5 Councilor William J. Eddy said he believed the city’s larger institutions are in partnership with the city, and have a shared responsibility to the community. He asked how the nonprofit status of UMass could be called into question, and then asked for a list of properties UMass owns across the city and what each property’s main purpose is.

At-large Councilor Joseph C. O’Brien said providing good public services that allow an institution like UMass and its employees to exist in the city requires resources.

“We recognize it’s a competitive market, but they can’t exist on an island,” Councilor O’Brien said.

At-large Councilor Frederick C. Rushton said that moving forward, it shouldn’t be an adversarial relationship, and that the institution and the city need each other. But At-large Councilor Konstantina B. Lukes said the secrecy surrounding the deal made it adversarial.

“It’s a question of whether we were stabbed in the heart or in the back,” Ms. Lukes said.

District 2 Councilor Philip P. Palmieri said he hopes the manager and UMass can come to a deal on how to fill the vacancies at Biotech Park with taxpaying businesses within the next few days.

Contact Steve Foskett via email at sfoskett@telegram.com or follow @stevefosketttg at www.twitter.com John J. Monahan of the Telegram & Gazette staff contributed to this report.